Teacher Pensions

Illinois Issues: The Next Pension Time BombBy Tara García Mathewson

Teachers comprise the largest college-educated workforce in this country. They generally accept lower pay to teach than they might earn in other fields, based on their education levels. Sure, they probably do so because they like their jobs. But they also make the sacrifice because teaching has historically come with a tradeoff of good benefits — time off in the summer, regular holiday breaks and pensions.

In Illinois, the final leg of that benefits proposition has cracked.

The National Council on Teacher Quality reviewed the state of teacher pensions across the country in a 2015 report, highlighting Illinois as one of the most egregious examples of states combating a crisis on the backs of new teachers. Starring in the hypothetical scenario are two teachers in the Springfield Public School District — both have similar credentials and start and stop teaching at the same ages, 25 and 55. Amy started in November 2010, Allison just two months later, in January 2011.

Based on the school district’s salary schedule and the NCTQ’s calculations, Allison will end her 30-year teaching career with barely more than $243,000 in pension wealth. Amy’s pension, on the other hand, will be valued at nearly $550,000. Both women contributed the same portion of their pay toward retirement, and they were on identical salary schedules throughout their careers. That means they both had about $200,000 automatically deducted from their paychecks and funneled to the retirement system while they were teachers. But Amy will have a much more comfortable retirement.

Allison, hired in 2011, joined a second tier of public sector employees who are still required to pay the same portion of their salary toward retirement but who get a substantially lesser benefit from the system. In fact, their benefit might be so little as to be illegal under federal law.